News: Flat cancelled over instalment? Buyer won't get booking amount-25-03-2022
It has also been decided that if a builder cancels the allotment of a buyer over non-payment of several instalments, it has to refund only the principal amount after deducting the money paid during booking a flat, that too after the unit has been resold or the project is completed.
GHAZIABA D: The Real Estate Regulatory Authority (Rera) in the state has decided to form a committee to look into projects that have been stalled over nonpayment of instalments by the buyers or allottees.
It has also been decided that if a builder cancels the allotment of a buyer over non-payment of several instalments, it has to refund only the principal amount after deducting the money paid during booking a flat, that too after the unit has been resold or the project is completed. The decisions were taken in a meeting between the UPRera officials and developers. Many of the small-time builders complained that their projects were stuck over paucity of funds because the buyers had not paid instalments either to the bank or the developer company. Officials said although there was a clause in the UP-Rera Act that allowed builders to cancel allotment of flats over non-payment of instalments, it was hardly proving to be of any respite to them. That was because a developer had to pay the entire amount to the buyer in case of such cancellations. This often affected the progress of the projects because the developers paid from the funds set aside for the construction work, the officials pointed out.
“According to a clause in the UP-Rera Act, a builder can cancel allotment of a flat if a buyer repeatedly delays paying the installments. In such cases, the builder can issue notices to the buyer demanding the instalment and also a penalty amount,” said a Rera official. “If the buyer fails to pay the instalment for three consecutive months, the builder has the right to cancel the allotment.”
Credai officials said the clause hardly helped. “That’s because the developers had to return the entire amount to the buyers within a stipulated time. The problem is more for small-time builders, who are anyway struggling with funds. If they have to return the amount and within a specified time, it leaves them with depleted coffers,” said Pankaj Bajaj, the president Credai in NCR.
“It has also become difficult for the developers to resell a flat at a time when the real estate sector is witnessing a slump,” he added. The developers recently held a meeting with the Rera officials on the issue of delayed instalments. “The builders made a point. So, a decision was taken that in case of cancellation, a developer will return the amount only after the flat is resold or the project is completed. Also, the developer will pay the buyer after deducting the booking amount and the interest related to the liabilities. Only the principal amount will need to be paid,” the Rera official said.
A decision was also taken to form a monitoring committee to ensure the progress of projects without any such hindrance.
